A Branding Opportunity

Editorial

RAPAPORT... The debacle surrounding Zimbabwe’s manipulation of the Kimberley Process (KP) poses significant challenges to the diamond industry. Along with the concern that Zimbabwe’s 4.5 million-plus carats could flood the market, diamantaires have expressed anxiety that a potential consumer backlash could spiral out of control.

Indeed, for the average consumer, a diamond is a diamond no matter where it comes from and Zimbabwe represents Africa, despite the positive achievements of its neighbors.

Not since the Blood Diamond movie has there arisen such a need to educate the public on how they can ensure that the diamonds they buy are, in fact, clean and, in many cases, have made a tremendous contribution to development.

Back in 2006, as Leonardo DiCaprio’s character Danny Archer told his prospective journalist lover, “In America, its bling bling, but out here [in Africa] it's bling bang,” the World Diamond Council (WDC) countered to effectively assure consumers that a great deal had been done to ensure that their diamonds were not cut to the shape of a bullet.

On the eve of the World Diamond Congress and WDC meetings to be held in St. Petersburg next week, the WDC, which represents the industry at the KP, will have to prove it has an active agenda beyond lauding its past achievements or offering its assurance that “less than one percent of global production [from Cote D’Ivoire] can be considered conflict diamonds,” and even beyond stressing its stance about Zimbabwe. Its manifesto ought to be relevant regardless of what transpires at the KP.

The Zimbabwe-Marange issue has received enough attention to instill skepticism about the effectiveness of the KP and the cleanliness of the industry. It is therefore hoped that the WDC will not only debate its role in the process, but have on its agenda the development of a campaign that will guarantee customers that their diamonds have an ethical legacy. Such a campaign could be conducted without endorsing the KP.

The location of the upcoming meeting couldn’t be more appropriate, as it was St. Petersburg that bore the idea to establish the now seemingly defunct International Diamond Board (IDB) to oversee generic marketing on behalf of the trade. The central theme of a generic campaign today may well have to focus on the blood diamond issue, rather than reflecting a more proactive and traditionally romantic approach. It is understood that progress regarding the IDB will be discussed at the World Diamond Congress meeting.

However, the industry should not rely on the WDC or the IDB to conduct these campaigns and ensure its viability. Ultimately, it will be left to individual companies across the pipeline to ensure that the diamonds they sell are ethical and to convey that message to their customers. Here, opportunity knocks.

For mining companies and particularly for producing countries such as Botswana, which have worked too hard and achieved too much to allow a rogue neighbor to taint their image, there may be great leverage to be gained by branding diamonds.

There are already examples of these branding techniques, like the De Beers Forevermark, Rio Tinto’s Select Diamantaire Mark and the CanadaMark, which signal that the diamonds in question are ethically sourced and can be traced throughout the pipeline, from shovel to shelf.

Botswana, South Africa, Namibia, Lesotho and Russia lack such branding, along with some of the significant miners, including ALROSA, Harry Winston, Petra Diamonds and Gem Diamonds. Each has good, appealing stories to tell that should be leveraged. Similarly, manufacturers and retailers, as well as manufacturing and trading centers such as Antwerp, Mumbai and Ramat Gan, would do well to attach their name to such brands or develop their own – if they are true to the message, that is.

It may have reached the point where the latter process is enacted out of necessity rather than choice. Certainly as we enter the third quarter of 2010, when most retailers are starting to gear up for the Christmas period amid a still uncertain economic environment, the industry can ill afford another negative to discourage consumers. Challenge may bring opportunity, but missing the opportunity could present deeper challenges down the road.

The Blood Diamond movie ended with a message: “January 2003, 40 nations signed The Kimberley Process — an effort to stem the flow of conflict diamonds. But illegal diamonds are still finding their way to market. It is up to the consumer to insist that a diamond is conflict-free.”

That message may be as relevant today as it was back then; the KP is an effort and nothing more and illegal diamonds are still finding their way to the market, while the stockpiled Zimbabwe stones ramp up this threat. Consumers, meanwhile, may well have learned to, this time, insist that their diamonds are conflict-free. It’s now up to the trade to reassure them.

Note: This article is an excerpt from a market report that is sent to RapNet members on a weekly basis. To subscribe, go to www.rapnet.com or contact your local Rapaport office. The writer can be contacted at avi@diamonds.net.